In the 1989 case General Motors Corporation v. United States, the Supreme Court ruled in favor of General Motors (GM). The dispute centered around tax deductions claimed by GM for interest paid on loans used to finance overseas operations. The Internal Revenue Service (IRS) argued that these payments were not deductible because they were effectively connected with income from sources within the U.S., which was exempt from taxation under a provision of the tax code. However, GM contended that this interpretation was incorrect and that it should be allowed to deduct these interest payments as business expenses. The Supreme Court agreed with GM's argument, holding that such interest expense could indeed be deducted since it wasn't directly allocable to any specific type or class of income but rather related generally to all activities and properties regardless of their location or source.

In the dissenting opinion for General Motors Corporation v. United States, it was argued that the majority misinterpreted Section 482 of the Internal Revenue Code and its regulations. The dissenters believed that this section should be interpreted to allow allocation of income among related entities only when necessary to prevent tax evasion or clearly reflect income, not just because a transaction between them might have been conducted differently if they were unrelated parties. They also disagreed with how the majority applied these principles to GM's transactions involving foreign tax credits, arguing that there was no evidence these transactions did not accurately reflect GM's income or were designed to evade taxes. Thus, in their view, reallocating GM’s income under Section 482 was inappropriate and contrary to congressional intent.